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May 8, 2014

Up-and-Coming Wealthy Generally Satisfied With Their Wealth Managers

But satisfaction wanes as wealth increases, the SEI Futurewealth study found

Wealthy clients need different services at different life stages, SEI says.

Individuals who are rapidly amassing wealth rate customer focus as the main factor in their relationship with their wealth manager, and wealth managers generally are meeting clients’expectations, according to a report released Thursday by SEI, Scorpio Partnership and NPG Wealth Management.

The report said that 64% of high-net-worth individuals reported their main money manager had a good knowledge of their core financial needs.

The report was based on a survey of 3,025 respondents globally with an average net worth of $2.9 million. It is the third in a four-part series delving into the findings of the Futurewealth Project, which maps the journey of the world’s up-and-coming wealthy with their wealth manager.

High-net-worth investors in the Americas were even more satisfied with their wealth managers, according to the study:

For understanding their financial goals and wealth objectives, 80%

For understanding their product and service preferences, 79%

For knowledge of their risk appetite, 79%

For good knowledge of their total financial picture, 78%

However, the research also found that satisfaction waned with growing affluence. Individuals higher on the wealth curve generally expressed less satisfaction with their primary wealth manager.

The most affluent Futurewealthy (those with more than $4 million in net worth) rated their money manager 16 points lower than those with less than $500,000 in regard to providing customer-focused service.

Similarly, client segmentation played a role in the Futurewealthy’s motivations for staying with their current wealth managers.

Among the wealthiest respondents, no more than 13% reported staying with their provider for any one reason. The chief motives were having the solutions and services to meet financial needs (13%); good portfolio performance (12%); and good advice, company reputation and company strength/stability (11% each).

By contrast, at the lower end of the wealth curve (less than $500,000 in net worth), portfolio performance was the predominant factor for continuing the relationship.

The report examined how these relationship motivators translated to relationship longevity. It found that the Futurewealthy had partnered with their primary wealth manager for an average of 14 years and currently had 51% of their assets with that manager.

Although respondents said they would not consolidate more than 53% of their total assets to a single provider, a pattern of larger consolidation over time emerged. The study found that by the age of 60, the proportion of wealth managed by the primary manager had risen to 65%.

Ryan Hicke, senior vice president of SEI Wealth Platform, said the research showed that investors at various stages in their lifecycles and levels of wealth were looking for different types of relationships with their current wealth managers.

“While this knowledge provides wealth managers with an opportunity to broaden their client base through a diversified offering, it also creates a challenge,” Hicke said.

“In order for wealth managers to increase the time spent learning about and interacting with clients, they must find a way to streamline transactions and add efficiencies to other areas of their business.”